Philip Maddocks: Investors concerned that European debt crisis will make their vacations abroad less fun

Monday

Nov 29, 2010 at 12:01 AM

Leading investors and policymakers expressed deepening concerns yesterday that the growing debt crisis in Europe will make their vacations abroad less fun.

Philip Maddocks

Leading investors and policymakers expressed deepening concerns yesterday that the growing debt crisis in Europe will make their vacations abroad less fun.

Calling for more austerity measures to help address the needs of prosperous travelers from around the globe, Rich Astoria Griswold, the leader of the Billable Vacation Hours Roundtable, which represents the holiday interests of powerful investment bankers, warned that it was time for countries like Greece, Ireland, and Portugal to get back to taking care of the people who really matter.

“We have now reached a point where the wealthy need vacation certainty to take them beyond the coming two months,” Griswold said in a statement. “So, we believe it is time to fix a date for a general well-being check of villas, five-star hotels and restaurants, and spas in Europe.”

“People feel misled and betrayed,” he said, reflecting the bitterness felt on Wall Street as the well compensated were dumfounded at the speed at which their vacation plans had gone from utopia to basket case. “We have always held our own interests in the highest regard. Now it’s time for these countries to start reciprocating.”

Euro and equities markets were affected by the possibility of a European-wide vacation downgrade, said Chris Nunnes, a senior market and leisure strategist for Forex.com.

Moody’s Investors Service said Monday in a statement that its current review of Europe’s vacation credit rating could result in a “multi-notch downgrade” amid the recent concerns expressed by influential investor-vacationers, although many parts would still be vacation grade.

“And now there is a lot of talk about contagion,” Mr. Nunnes said, adding that the vacation credit problem could shift to other continents.

“I wouldn’t book a trip to Australia yet,” he said.

Increasingly concerned about the deepening displeasure that could be awaiting at their accustomed vacation sites abroad, affluent traders are warning that any new vacation bookings may need to contain rescue plans to cover Asia and South America as well as Europe in order to contain the troubles to their vacation stays. These traders appear frustrated by the slow pace at which their holiday demands were being met.

“These country’s have to acknowledge the state our vacation plans are in and start doing something about it,” said Paul Solomon, a trader with the Swiss bank UBS. “This may be tough medicine for some, but they need to face up to this problem before it gets any worse.”

While most countries overseas have largely impressed investment bankers with their commitment to impose austerity measures on others and not well-off vacationers, vacation analysts continue to worry that without more support for the businesses that cater to the super wealthy, the ultra expensive amenities that made these destinations choice vacations spots for the phenomenally networthed could disappear.

“This is something that would have been unthinkable just a couple of years ago, especially considering all the creative financial instruments we have introduced them to, ” said E. James Jameson, relaxing in a whirlpool and sipping from a glass of bottle-aged vintage port after what he described as “a spirited day of wealth making.”

Mr. Jameson said he was still planning to vacation abroad this year, but added, “If Ireland continues to struggle to get its financial house in order, I have to wonder how that is going to affect my outings to Trim Castle and Kilmainham Gaol and what it’s going to do to my appetite when I dine at the Dromoland Castle Restaurant.”

Though Portugal has raised enough funds of late from bond markets, Mr. Jameson, like a number of other investors, said he has grown fearful that it, too, will eventually become a less fun place for him to vacation at because of its growing money troubles, which are bound to eventually inconvenience him.

One official in Europe, who asked for anonymity because he was not authorized to speak publicly on the vacation plans of obscenely moneyed investors, seemed to bear out the fears of Mr. Jameson and other well-to-do travelers when he said that the budget presented by the government in Lisbon did not contain the type of far-reaching changes proposed by worldly travelers for their profligate travels.

“If Ireland is becoming less fun for wealthy and well-heeled investors, then you’d have to look at what’s going on in Portugal as well,” the official said.

Pennington Bosworth, a senior credit and free time strategist in London for Royal Bank of Canada, said longer-term worries remained about the condition of luxury holidays abroad. “The devil will be in the detail as always, particularly for the most extravagantly prosperous among us, who will not suffer any conditionality on their sumptuousness,” Mr. Ballard said. “We see these demands weighing on financial spreads in the coming days as we work through the uncertainty.”

“Though,” Mr. Ballard added hopefully, “there is no sign this leisure escape contagion is spreading to tax havens like Nauruin and the Pacific island country of Vanuatu. So the dollars of the stupendously wealthy can continue to vacation in uncompromised splendor even if their owners can’t.”

Philip Maddocks can be reached at pmaddock@cnc.com.

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